Back in 2008 a Florida couple running a small business that throws children's parties bought two costumes that looked like Tigger and Eeyore on eBay from a firm in Peru for $500. When Walt Disney saw the characters advertised online, it threatened legal action for an infringement of copyright laws and presented the couple with a seven-point demand to cease and desist.

The couple complied with all but one – instead of sending the costumes to Disney to be destroyed, they sent them back to Peru for a refund. "We needed the money," explained Marisol Perez-Chaveco, whose family was on public assistance. This was too much for Disney, which responded with a million-dollar lawsuit plus costs.

One would think that a company dedicated to marketing itself as the wholesome home of eternal childhood would regard such a heavy-handed approach as an own goal; as though the magic castle was home not to family fun but a faceless corporation ruthlessly pursuing small family businesses. But for Disney that is precisely the point. They want people to witness the ferocity with which they pursue their interests (they once threatened to sue a daycare centre for painting Minnie, Micky and Goofy on its walls) pour encourager les autres.

After a week in the West Bank participating in the annual Palestine Festival of Literature, you get the feeling Israeli security services are using the same public relations team as Disney. We were kept several hours at the Israeli-Jordan border while three Britons with Turkish and Arabic sounding names were held for questioning.

At the West Bank-Israel crossing on the access highway to Nazarath, only brown-skinned people had their passports held. Our final event in the village of Silwan – an evening of poetry, literature and Palestinian rap – was a riot. Literally. Local youth responded to Israeli teargas with a hail of stones. The British consul, who was to attend, turned back halfway. The rest of us, holding onions to our noses to counter the gas, walked past burning tyres, smoking skips and bricks strewn across the road, to the venue. By the time we got there, most people had fled.

The point isn't that they should have treated us better because we were foreign. But rather, if this is how they treat foreigners who they know have a voice, imagine how they treat locals. Families with small children waiting for hours before putting the entire contents of their car in shopping trolleys and wheeling that through security so they can get home. Grown men and women being shouted at by teenagers with guns. We got only a glimpse. And even that was an eye opener.

The intimidation, humiliation and harassment that emerge from these encounters are not byproducts of a broader strategy. Like Disney's legal warnings, they are central to the strategy itself. Occupation on this scale and for this length of time can only prevail by a consistent and persistent effort to crush the spirit of the occupied.

Meanwhile, Tinker Bells sprinkle their fairy dust to blur the view or to beautify the ugly. Witnesses are told they either didn't really see what they saw, only saw what they wanted to see, should have seen something else as well, or should have gone somewhere else where they could have seen worse.

Elsewhere, a vigorous marketing campaign ensures that when the strip-searching is done the first thing you see when you pull up your trousers are tourist posters of religious sites against azure skies saying "Welcome to Israel".

Since 2005, a massive rebranding campaign has taken place to dispel Israel's reputation for religiosity and war and portray it instead as the home of "creative energy". The trouble is, since then there has been the bombing of Lebanon, the Gaza blockade, the attack on a Gaza aid flotilla, and the escalation of illegal settlements.

To suggest that Palestinians are equally responsible for this state of affairs would suggest the two sides hold equal power to shape events. They don't. No matter how many rhetorical checkpoints get thrown up, there are some basic facts you just cannot get around. Israel is the occupier; Palestinians are the occupied.

That justifies nothing, and explains a great deal. Israel does not have to be the worst place on Earth for the occupation to be worthy of condemnation. Nor can its actions or existence be understood in isolation from western foreign policy and Europe's history of antisemitism. Similarly, Palestinians do not need to be beyond criticism for their right to resist occupation to be considered valid.

At the first cabinet meeting after the 1967 war Israel's justice minister, Yaakov Shimshon Shapira, asked: "In a time of decolonisation in the whole world, can we consider an area in which mainly Arabs live, and we control defence and foreign policy? Who's going to accept that?"

The truth is that while much of the world didn't like it, they were prepared to accept it for several decades. That seems to be changing. Israel's power is not in question. But its influence is clearly waning. Polls show a significant shift in Europe towards support for Palestinians. In September, the UN general assembly looks set to support the recognition of a Palestinian state within its 1967 borders.

Whether such a solution is even possible at this stage is an open question. Through its land grabs and settlement building Israel has created an ugly patchwork out of the West Bank, which is sewn together with a range of separate and unequal ID cards, access roads and car registration plates for Israelis and Palestinians that would be difficult to unpick without the whole thing unravelling.

Israel's refusal to talk to Hamas and the effective emasculation of Fatah has left it with no one with any credibility to negotiate with. The Palestinian Authority – an authority without any real authority – is regarded by most as simply another layer of occupation. Last week the Palestinian president, Mahmoud Abbas, said he opposed another armed uprising. But the truth is that Fatah wasn't behind the last uprisings, and would be incapable of leading any more. Through the entire week, Abbas's name did not come up once.

In this regard, the Israeli occupation has been a victim of its own success on its own terms. It has not so much provided security for a Jewish state as created a fortified country in which non-Jews live as a majority either as second-class citizens or not as citizens at all.

"The continuation of the occupation guarantees the nullification of Zionism," argued the historian Professor Yehuda Bauer last week, the day before a demonstration of prominent Israelis against the occupation. "That is, it rules out the possibility that the Jewish people will live in its land with a strong majority and international recognition. In my eyes, this makes [Israel's] government clearly anti-Zionist."

A Palestine that is independent, non-contiguous and home to thousands of foreigners who do not respect its laws is not viable. Given the trajectory of Israeli domestic politics, an Israel that reverses the expansionist impulses of the past 44 years in return for peace is not likely. The status quo is neither sustainable nor desirable. Something has to give.

One need not embrace Palestinian self-determination to challenge this situation. A simple demand for equality and human rights for Palestinians will do.

• This article was amended on 25 April 2011. A phrase in the original read, "At the crossing into Nazareth". The location of the crossing has been clarified in the text.